Free Index Numbers MCQs with Answers
30 Index Numbers MCQs from Quantitative Methods, each with the correct answer and a written explanation of why it is correct. Free and unlimited, with no account needed.
Index numbers measure relative changes in prices, quantities or values over time using a base period. Work includes simple and weighted price indices, aggregate methods, consumer price calculations, percentage change and purchasing power, with attention to choosing a base year and interpreting an index rather than treating it as an absolute amount.
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30 questions · page 2 of 2
- A. 0
- B. 1
- C. 10
- D. 100
Explanation: The base period is conventionally assigned an index value of 100. Other periods are then expressed as percentages of the base period, so…
Correct answer: 100- A. Arithmetic mean of Laspeyres and Paasche indices
- B. Ratio of Laspeyres to Paasche indices
- C. Difference between Laspeyres and Paasche indices
- D. Geometric mean of Laspeyres and Paasche indices
Explanation: Fisher's price index is the geometric mean of the Laspeyres and Paasche price indices.
Correct answer: Geometric mean of Laspeyres and Paasche indices- A. Geometric mean of price and quantity indices
- B. Arithmetic mean of Laspeyres and Paasche price indices
- C. Difference between current and base expenditures
- D. Ratio of current expenditure to base quantities
Explanation: The Dorbish-Bowley index takes the arithmetic mean of the Laspeyres and Paasche price indices.
Correct answer: Arithmetic mean of Laspeyres and Paasche price indices- A. It measures changes in total expenditure
- B. It measures changes in commodity prices
- C. It measures changes in physical quantities
- D. It measures changes in purchasing power
Explanation: A quantity index measures changes in the physical volume of goods or services, such as production or consumption.
Correct answer: It measures changes in physical quantities- A. 18 percent
- B. twenty-eight percent
- C. 128 percent
- D. 28 percent
Explanation: The increase is 128 minus 100, or 28 index points. Since the base is 100, these 28 points represent a 28 percent rise, not a 128 percent…
Correct answer: 28 percent- A. Unit test
- B. Circular test
- C. Factor reversal test
- D. Time reversal test
Explanation: The unit test requires an index to remain unchanged when units such as kilograms or grams are substituted consistently.
Correct answer: Unit test- A. Base-period expenditure
- B. Value index
- C. Current-period expenditure
- D. Simple aggregative index
Explanation: The factor reversal test requires P01 multiplied by Q01 to equal V01, the value index.
Correct answer: Value index- A. The total physical output of an economy
- B. All goods produced by domestic industries
- C. A fixed basket of consumer goods and services
- D. The foreign exchange reserves of a country
Explanation: A consumer price index tracks the cost of a selected basket purchased by consumers.
Correct answer: A fixed basket of consumer goods and services- A. Show the same proportional rise
- B. Remain equal to 100
- C. Show a fall in total value
- D. Measure only the quantity change
Explanation: When every price changes by the same proportion and quantities do not change, the price index should reflect that common proportional…
Correct answer: Show the same proportional rise- A. Increased by 15 percent
- B. Decreased by 15 percent
- C. Decreased by 85 percent
- D. Remained unchanged
Explanation: An index of 85 is 15 points below the base value of 100. Therefore, the measured level has fallen by 15 percent relative to the base…
Correct answer: Decreased by 15 percent